Baked Texture Map Is Blurry
"Diffuse" blurry is caused by the texture resolution, but the long stipes of blur are probably caused by the bake advanced settings.

After the texture is baked, Blender apply a margin on the UV island edges. From the manual page:


  Baked result is extended this many pixels beyond the border of each UV “island,” to soften seams in the texture.


Inside the orangish area you can see the texture, outside it the margin. The blurring effect is probably caused by the interpolation between pixel color that occours during the boundary extension.





Margins are not bad. They are useful to hide the seams; problems occour when they overlap with the islands in the neighborhood.

Try to lower the margin size or increase the space between the UV islands  to avoid overlapping in the baked images.